Swift, the body that handles global banking transactions, says it will cut Iran’s banks out of the system on Saturday to enforce sanctions.

The move will isolate Iran financially by making it almost impossible for money to flow in and out of the country via official banking channels. It will hit its oil industry, but may also have a heavy impact on Iranians who live abroad and send money home. The move follows EU sanctions against Iran over its nuclear programme. The US and its allies accuse Iran of trying to develop nuclear weapons – a charge it denies. Iran last week agreed to hold talks with six major world powers over its nuclear programme, although no date or venue has been set.

Almost all banking transactions pass through Belgium-based Swift, the Society for Worldwide Interbank Financial Telecommunication, which is sometimes called the “glue” that holds the financial system together. Swift will pull the plug at 1600 GMT on Saturday, in what is all but the final blow to Iranian business dealings.

Its announcement coincides with news that major money exchange houses in the nearby United Arab Emirates have stopped handling Iranian rials over the last few weeks, something that has further reduced Iran’s ability to trade and acquire hard currency.

Iran’s business activities had already been restricted by US anti-money laundering legislation which made it risky for banks around the world to do business with Iran, including trade financing.

Iran has halted oil sales to British and French companies, the nation’s oil ministry has said. European Union member states had earlier agreed to stop importing Iranian crude from 1 July. The move is intended to pressure Tehran to stop enriching uranium, which can be used for civilian nuclear purposes but also to build warheads.

Iran insists its nuclear programme is peaceful, but the UN’s International Atomic Energy Agency says it has information suggesting Iran has carried out tests “relevant to the development of a nuclear explosive device”. The French news agency AFP says the decision is not expected to have a big impact. Last year France bought only 3% of its oil – 58,000 barrels per day (b/d) – from Iran and the UK imported even less Iranian oil. A UK government official told the BBC there would be “no impact on UK energy security”.

Some Iranian media had announced on Wednesday that Iran had stopped oil exports to the Netherlands, Greece, France, Portugal, Spain and Italy in retaliation for the EU’s oil embargo, but this was later denied by the oil ministry. The EU oil embargo, agreed last month, was phased so member states that were relatively dependent on Iranian crude – notably Greece, Spain and Italy – had enough time to find alternative sources.

The bloc currently buys about 20% of Iran’s oil exports, which account for a majority of government revenue. However, Iran’s Oil Minister Rostam Qasemi said that a cut in exports to Europe would not hurt Tehran.